GST on a SaaS subscription in India: the rate, exports and foreign tools (2026)

The seven cases

Most questions about GST on SaaS are one of these seven sales or purchases. The table says what to charge, what the buyer can claim and which rule applies.

Two notifications above share the number 10/2017 and are different documents: the "Rate" one (28 June 2017) is the reverse-charge list, the other (13 October 2017) is the registration exemption. Quote both with their dates.

Selling SaaS inside India

An invoice for a ₹10,000 monthly plan sold from Bengaluru to a company in Mumbai carries 18% IGST: ₹1,800, for a total of ₹11,800. You report the invoice in GSTR-1; it then shows in the buyer's GSTR-2B and they claim the ₹1,800 as input tax credit. The buyer's net cost is ₹10,000. If both companies were in Karnataka, the ₹1,800 would split into ₹900 CGST and ₹900 SGST.

Two tax codes are in common use for software: SAC 997331 for licensing the right to use software, and SAC 998314 for software design and development services (SAC 998313 is IT consulting and support). All three carry 18%. Which one fits a subscription is a question for your CA, because the code you choose goes on every invoice.

Put the buyer's GSTIN on every B2B invoice. Without it they cannot claim the credit, and a business customer will ask you to reissue the invoice.

Selling SaaS to a customer abroad

An overseas sale qualifies as an export of services only when all five conditions in Section 2(6) of the IGST Act are met: you are in India, the customer is outside India, the place of supply is outside India, you are paid in convertible foreign exchange (or in rupees where the RBI allows it), and the two parties are separate legal entities.

If they are, the supply is zero-rated under Section 16. You have two routes:

1. Supply under a Letter of Undertaking. You file Form GST RFD-11 on the GST portal, and you invoice without charging IGST. An LUT is valid for one financial year (1 April to 31 March), so file the new one before your first export invoice of the year.
2. Pay IGST and claim a refund. This works without an LUT but ties up cash until the refund comes.

Keep proof that the money arrived in foreign currency: your bank's foreign inward remittance advice or certificate, and the payment gateway's settlement report. An officer who audits a zero-rated invoice will ask for it.

Buying foreign SaaS

Many foreign tools bill in dollars and charge no Indian GST. For a GST-registered Indian business, that does not make the purchase tax-free: the tax is payable by you, as the recipient, under reverse charge. In your GSTR-3B you show the purchase in Table 3.1(d), pay the IGST in cash, and claim it as input tax credit in the same return (sources differ on whether the credit goes in Table 4(A)(2), the table for imports of services, or 4(A)(3); check the current form). On ₹50,000 of cloud bills in a month, that is ₹9,000 paid in cash and ₹9,000 claimed back, so the net tax cost is zero but the cash leaves first.

If a foreign vendor does charge Indian GST because it is registered here, treat it as any domestic purchase. Make sure the invoice carries your GSTIN.

Mistakes we see

• Not renewing the LUT. The old one expires on 31 March. An export invoice raised on 2 April without a new LUT is not covered.
• Invoicing a foreign customer without proof of foreign currency. If the payment arrives in rupees from an unrelated route, the export condition may not be met.
• Forgetting the credit on gateway fees. Payment gateways add 18% GST to their fee. Download the monthly tax invoice from the dashboard and claim it.
• Skipping the GSTIN on the buyer's side. The credit chain breaks if the invoice shows only a company name.

Questions people ask

What is the GST rate on a SaaS subscription in India?

The rate is 18%. On a sale inside your state it is shown as 9% CGST plus 9% SGST. On a sale to another state it is shown as 18% IGST. The rate for software services comes from Notification 11/2017-Central Tax (Rate) as amended; read the current schedule on the CBIC tax information site before you set up billing.

Do overseas customers pay GST on Indian SaaS?

No, if the sale is an export of services under Section 2(6) of the IGST Act. You invoice at 0% under a Letter of Undertaking and receive the payment in foreign currency. Without an LUT you pay IGST and claim it back as a refund.

Can an Indian company claim credit on AWS, Slack or Notion?

Yes, if it is registered for GST and uses the service for business. On a vendor that charges Indian GST, the credit is on the vendor's invoice, which must show your GSTIN. On a foreign vendor that charges none, you pay IGST under reverse charge and claim the same amount as credit in the same return.

Do I need GST registration if my SaaS earns under ₹20 lakh?

A service provider whose turnover stays under ₹20 lakh a year (₹10 lakh in special category states) does not have to register, and Notification 10/2017-Integrated Tax (13 October 2017) extends this to inter-state services. Business customers usually ask for a GST invoice anyway so they can claim credit, so many founders register before they have to. Whether this relief covers exports is debated; ask your CA.

Which tax code goes on a SaaS invoice, 997331 or 998314?

Both attract 18%. SAC 997331 is licensing of the right to use software; SAC 998314 is IT design and development services. A subscription that gives access to hosted software is usually put under one of the two, and your CA should choose and apply the same code every month.

Sources

1. CBIC GST portal, rates for goods and services, page updated 22 October 2026 (it links to the rate schedules on taxinformation.cbic.gov.in; Notification 11/2017-Central Tax (Rate), 28 June 2017).
2. CBIC Notification 10/2017-Integrated Tax, 13 October 2017: exemption from registration for inter-state services, as amended by Notification 3/2019-Integrated Tax.
3. GST portal: Form GST RFD-11 (Letter of Undertaking) and GSTR-1, GSTR-3B filing.
4. Integrated Goods and Services Tax Act, 2017: Section 2(6) export of services, Section 5(3) reverse charge, Section 16 zero-rated supply; CGST Rules, 2017, Rule 96A.
5. Notification 10/2017-Integrated Tax (Rate), 28 June 2017: services on which the recipient pays under reverse charge.

We read the CBIC rates page on 29 October 2026 and cross-checked the rules above against published guides. We did not read the full text of the rate schedule that day, so confirm the rate and codes on the CBIC site before a filing. This page is general information, not tax advice.